June 2020 Municipal Market Update
Since we published our 2019 Municipal Market Year in Review market update in December, the financial markets have experienced historic turbulence with the onset of the COVID-19 pandemic. As a response to this turbulence, Blue Rose has begun publishing weekly “Special Editions” of The Shield to address key municipal market
Developing Story: Favorable Tax Policy Changes Potentially on the Horizon
As we shared with you in a prior newsletter article in April, the possibility has existed that tax policy changes impacting the public finance sector could be a part of various stimulus measures that are undertaken by Congress. Favorably, growing momentum behind these changes has advanced these initiatives considerably. Last
Credit Rating Factors in a Post-Pandemic World
In the 90-plus days since COVID-19 interrupted the 2020 Spring term in an historically unprecedented fashion, the credit rating agencies have moved quickly to measure the pandemic’s immediate and prospective impact upon higher education institutions across the country. On March 18, Moody’s changed its outlook on the higher education sector
Debt Restructuring Alternatives – Additional Tools in the Toolbox
It is evident that issuers and borrowers across the public finance sector – from States and State agencies to municipalities, from higher education to healthcare and other non-profit organizations – are working diligently to establish new budgets for the upcoming fiscal year. Much uncertainty exists, of course, as a result of
Budgetary Relief with Interest Rate Swaps
As a result of the economic slowdown caused by the COVID-19 pandemic, many budgets are strained and borrowers continue to look for ways to conserve cash as a way to increase their liquidity. Our clients and other issuers and borrowers have been refinancing and restructuring debt transactions to delay near-term debt
Restructuring Escrows with Pre-Refunded Municipal Securities
As many of you are aware, interest rates on US Treasury securities have recently fallen significantly. Interestingly, at the same time, interest rates on municipal securities, including pre-refunded bonds (which are typically backed by US Treasuries), have risen substantially as shown in the chart below. This has created a unique
Basis Risk Between SIFMA and LIBOR in the Current Market
Many issuers with outstanding variable rate demand bonds (“VRDBs”) have been closely tracking the SIFMA index in recent weeks, due to increased market volatility. On March 18th, the weekly SIFMA index reset more than 390 basis points higher than the previous week’s reset, and then decreased by 49, 288, and
The Shield – April Edition
Summary In Minnesota, spring weather is typically rather erratic. This has been evidenced once again in 2020, which has made me ponder the similarities of this year’s weather to the recent tax-exempt market behaviors. No, I’m not suggesting the two are correlated, although I wouldn’t be the first to make
Take Action Now for Money Available Under the CARES Act
Paycheck Protection Program—Available to Institutions With Less Than 500 Employees* The recently signed CARES Act contains a program that allows businesses and non-profit institutions with fewer than 500 employees (including sole proprietors and nonprofits) to have access to “paycheck protection loans” through June 30, 2020. While these monies are characterized
Helping Institutions Keep an Eye on the Medium- and Long-Term Implications of the COVID-19
The current COVID-19 health pandemic is creating tremendous concern for the higher education sector: Moody’s has downgraded the sector to a “negative” outlook, S&P has revised their outlook on privatized/P3 higher education housing deals to “negative,” and each day there are articles discussing the near-term impact of the coronavirus. Institutions
The Shield: A Special Market Update Edition
Interest rates have never been lower. Yes, participants in the fixed income and public finance markets have said this before; many times, in fact, over the last 20 years. I was reminded of this again as we recently priced a taxable bond issue for a long-time client. Yet, we have
GICs: What’s the Trade-off?
At Blue Rose, we’re often asked about the usage of Guaranteed Investment Contracts (“GICs”) and the trade-off between risk and return. Utilizing a GIC as opposed to a Repurchase Agreement (“Repo”) for the reinvestment of bond proceeds can result in a higher yield of approximately 25 basis points, depending on
Money Market Funds vs. Laddered Portfolios Part 1: Market Expectations
Blue Rose recently has seen many issuers contemplate whether to reinvest their bond proceeds in a money-market fund or a laddered portfolio. A money-market fund offers a short-term variable rate that, in the current inverted yield curve environment, is often higher than the long-term fixed rate offered by a laddered
Blue Rose’s Scott Talcott, promoted to Senior Vice President
Mr. Talcott provides financial advisory services to the firm’s clients with respect to the planning and execution of all types of debt, derivative, reinvestment, and P3 transactions. He specializes in analyzing and assessing financial strategies from both a quantitative and qualitative standpoint to assist clients in selecting the most efficient
Connecting with Blue Rose Advisors in 2020
Happy new year! At Blue Rose, we welcome the new year as it presents our advisory team and our clients with another opportunity to improve their organizations and overcome various challenges, whether those be in the capital markets or sector specific. Of course, our team is excited to connect with you, meeting
Benefiting From A Longer Duration In An Inverted Yield Curve Environment
Generally, in a positively sloped yield curve environment, issuers benefit from investing the bond proceeds in their project funds by purchasing investments with a longer duration that offer a higher yield when compared with money market funds or other short duration instruments. In this manner, project funds are typically invested
2019 Municipal Market Year in Review
The year began with a significant amount of market uncertainty, with many market participants anticipating impending market-wide turmoil. However, contrary to many consensus forecasts, the market saw strong overall performance. Heading into 2020 there appears to be more optimism, but unfortunately, still some uncertainty. LIBOR Replacement The 2019 milestones
Your Blue Rose Capital Advisor Update
Blue Rose Capital Advisors is thankful for the new opportunities and progress made during this holiday season. One advancement that Blue Rose Capital Advisors is excited to announce is our updated website. As our company continues to grow, we value having up-to-date technology that is clear and concise. We
Utilization of a Laddered Portfolio Investment Strategy for Debt Service Reserve Funds
Recently, some of our clients have been utilizing a “rollover” laddered portfolio investment strategy for their debt service reserve funds (“DSRF”). Specifically, this approach is often attractive to small borrower clients because the total fees associated with structured investment products such as a repurchase agreement or guaranteed investment contract can
Comparing SLGS and OMS Escrow Portfolios in the Current Market
By design, the yields on State and Local Government Series (SLGS) securities are slightly lower than the yields on open market securities (OMS). This often encourages issuers to bid OMS for refunding escrows rather than using SLGS, for a higher portfolio yield and a lower cost to fund a defeasance
Being of Service – An Annual & Ongoing Tradition
In my house, baseball season turns to football season, which quickly turns to my favorite – basketball season. For many like us in the northern climates of the U.S., summer sunshine progresses to fall colors which, at least in Minneapolis, very quickly progress to winter cold. Audit season leads, typically none-too-quickly, to
New Tax Considerations for Taxable Advance Refundings
The National Association of Bond Lawyers (NABL) held a conference this month where a panel entitled “Tax Hot Topics” inspired a discussion on taxable advance refundings. Specifically, there was debate about whether an escrow established with the proceeds of a taxable advance refunding of tax-exempt bonds was yield restricted to
How to Cope with Adverse Swap Values
Rates have fallen and yield curves have flattened (and in some areas inverted) significantly since the start of the year. By virtue of these lower rates, many borrowers have realized positive impacts to their capital structure in a variety of different ways: embarking on a new financing, a new synthetic
Taxable Advance Refunding Transactions
No doubt many of you are contemplating or exploring the feasibility of a taxable advance refunding for your borrower clients. Given the elimination of tax-exempt advance refundings as a result of the 2017 tax reform act and the precipitous decline in interest rates over the past few months, many borrowers
Total Return Swaps
Total return swaps issued in combination with long term fixed rate notes or 20-year fixed rate debt are a viable alternative for tax-exempt issuers that typically issue Direct Purchase Bonds or Variable Rate Demand Obligations as a source of capital funding. Blue Rose can help you evaluate whether a total return
Julia Cain Joins Blue Rose Capital Advisors as an Analyst
Richa Sharma Joins Blue Rose Capital Advisors as an Analyst
Understanding Private Activity Bonds in the World of Municipal Bonds
In the Midst of Ongoing Market Volatility, Find Certainty with Fixed Rate Reinvestment
The Shield – Leveraging Debt for Campus Improvement
Interest Rate Swaps: An Effective Risk Management Tool
Looming Uncertainty for the Higher Education Sector at the Dawn of the Second Trump Administration
Series 50 and Series 54: The Path to Becoming a Municipal Advisor
Blue Rose Capital Advisors is Presenting at the “Leveraging Debt for Campus Improvement” Live Webinar
